Friday, June 11, 2010

"The oil blowout will mean more subsidies for the corn-fuel industry. That's bad news for consumers." (ADM; BP)

I'm using Archer Daniels as a proxy for what's left of the group. (Aventine, Pacific and a slew of others went BK).
From Slate:

The most disgusting aspect of the blowout in the Gulf of Mexico isn't the video images of oil-soaked birds or the incessant blather from pundits about what BP or the Obama administration should be doing to stem the flow of oil. Instead, it's the ugly spectacle of the corn-ethanol scammers doing all they can to capitalize on the disaster so that they can justify an expansion of the longest-running robbery of taxpayers in U.S. history.

Listen to Matt Hartwig, communications director for the Renewable Fuels Association, an ethanol industry lobby group: "The Gulf of Mexico disaster serves as a stark and unfortunate reminder of the need for domestically-produced renewable biofuels." Or look at an advertisement that was recently placed in a Washington, D.C., Metro station: "No beaches have been closed due to ETHANOL spills. … America's CLEAN fuel." That gem was paid for by Growth Energy, another ethanol industry lobby group.
The blowout of BP's Macondo well has given the corn-ethanol industry yet another opportunity to push its fuel adulterant on the American consumer. And unfortunately, the Obama administration appears ready and willing to foist yet more of the corrosive, environmentally destructive, low-heat-energy fuel on motorists.

Why does the ethanol business need federal help? The answer is so disheartening that after five years of reporting on the corn-ethanol scam, I find it difficult to type, but here goes: The corn-ethanol industry needs to be bailed out by taxpayers because the industry was given too much in the way of subsidies and mandates. And now the only way to solve that problem is—what else?—more subsidies and mandates. The BP mess provides the industry with the opening it needs to win those subsidies from the federal government.

In its 2005 energy bill, Congress dramatically increased the mandates (and subsidies) for corn ethanol. That resulted in a surge of new construction. Led by German financial giant WestLB AG, banks poured billions of dollars into new distilleries, which quickly created an ethanol bubble that mirrored the U.S. real estate bubble. Over the past five years, U.S. ethanol production capacity has more than tripled and now stands at more than 13 billion gallons per year. But that's far more capacity than the U.S. motor fuel market can absorb. In March, nearly 1 billion gallons of ethanol production capacity was sitting idle. And yet, according to the Renewable Fuels Association, the industry has about 1.4 billion gallons of additional distilling capacity under construction....MORE